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Analysis: Trading the Anticipated Top in Gold

Analysis: Trading the Anticipated Top in Gold

Kristian Kerr, Sr. Currency Strategist

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The next couple of trading days look important for gold from a cyclical perspective. Several medium and short-term studies suggest it is prone to a turn of some sort during this timeframe. With strong resistance just overhead at 1301/16 (50% retracement of the 2008 to 2011 advance and 4th square root progression of year-to-date low) we favor a top. Given the corrective nature of the advance from the June 28th low the anticipated turn should provide a good opportunity to align with the broader downtrend in place since October. Weakness below this week’s low near 1270 will confirm that a top is in place, but a close under a key Gann support level at 1248 is really required to signal that a more meaningful decline is underway. Strength in XAU/USD beyond 1316 after Tuesday would invalidate the cycle turn window and shift our focus higher.

XAU/USDDaily Chart: July 19, 2013

PT_short_xau_body_Picture_2.png, Analysis: Trading the Anticipated Top in Gold

Charts Created using Marketscope – Prepared by Kristian Kerr

Key Event Risk Next Week:

PT_short_xau_body_Picture_1.png, Analysis: Trading the Anticipated Top in Gold

Source: DailyFX Calendar

LEVELS TO WATCH

Resistance: 1316 (Gann), 1347 (Fibonacci)

Support: 1270 (Weekly low), 1248 (Gann)

STRATEGY – Sell XAU/USD at 1312

Entry: 1312

Stop: 1-day close above 1316

Target 1: 1248

Target 2: 1218

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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